Finance Act, 1978
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Relief to individuals on loans applied in acquiring interest in companies. |
8.—(1) Notwithstanding that an individual does not satisfy one or both of the conditions set out in paragraphs (a) and (b) of subsection (2) of section 34 of the Finance Act, 1974 , he shall be entitled to relief under the said section for any interest paid in respect of any period beginning on or after the 2nd day of February, 1978, on any loan to him applied for a purpose specified in subsection (1) of the said section 34 if— | |
(a) the company part of whose ordinary share capital is acquired or, as the case may be, to which the money is lent is— | ||
(i) both a company referred to in subparagraph (i) of paragraph (a) of the said subsection (1) and a company in relation to which the individual was a full-time employee, part-time employee, full-time director or part-time director during the period taken as a whole from the application of the proceeds of the loan until the interest was paid, or | ||
(ii) both a company referred to in subparagraph (ii) of the said paragraph (a) and a private company in relation to which, or in relation to any company which would be regarded as connected with it for the purposes of the said section 34, the individual was during the said period a full-time director or a full-time employee, | ||
and | ||
(b) the company or any person connected with the company has not, during the period specified in paragraph (a) (i), made any loans or advanced any money to the individual or a person connected with the individual other than a loan made or money advanced in the ordinary course of a business, which included the lending of money, carried on by the company or, as the case may be, by the person connected with the company. | ||
(2) In relation to any payment or payments of interest on any loan or loans applied— | ||
(a) in acquiring any part of the ordinary share capital of a company other than a private company, or | ||
(b) in lending money to such a company, or | ||
(c) in paying off any other loan or loans applied for a purpose specified in paragraphs (a) and (b), | ||
no relief shall be given for any year of assessment by virtue of this section other than to a full-time employee or full-time director of the company and no such relief shall be given to such employee or director on the excess of that payment, or the aggregate amount of those payments, for that year of assessment over £2,000. | ||
(3) Where relief is given by virtue of this section to an individual and any loan made or money advanced to him or to a person connected with him is, in accordance with the provisions of paragraph (c) of subsection (5) and by virtue of subparagraph (ii), (iii), (iv) or (v) of subsection (5) (c), subsequently regarded as not having been made or advanced in the ordinary course of a business, any relief so given, which would not have been given if, at the time the relief was given, the loan or money advanced had been so regarded, shall be withdrawn and there shall be made all such assessments or additional assessments as are necessary to give effect to the provisions of this subsection. | ||
(4) In this section— | ||
“90 per cent. subsidiary” has the meaning assigned to it by section 156 of the Corporation Tax Act, 1976 ; | ||
“full-time employee” and “full-time director” mean, in relation to a company, an employee or director, as the case may be, who is required to devote substantially the whole of his time to the service of the company; | ||
“holding company” has the meaning assigned to it by section 107 of the Corporation Tax Act, 1976 ; | ||
“part-time employee” and “part-time director” mean, in relation to a company, an employee or director, as the case may be, who is not required to devote substantially the whole of his time to the service of the company; | ||
“private company” has the meaning assigned to it by section 33 of the Companies Act, 1963 . | ||
(5) For the purposes of this section— | ||
(a) any question whether a person is connected with another shall be determined in accordance with the provisions of section 16 of the Finance (Miscellaneous Provisions) Act, 1968 , and paragraph (b); | ||
(b) a person is connected with any other person to whom he has, otherwise than in the ordinary course of a business carried on by him which includes the lending of money, made any loans or advanced any money, and with any person to whom that other person has so made any loan or advanced any money and so on; | ||
(c) a loan shall not be regarded as having been made, or money shall not be regarded as having been advanced, in the ordinary course of a business if— | ||
(i) the loan is made or the money is advanced on terms which are not reasonably comparable with the terms which would have been applied in respect of that loan or the advance of that money on the basis that the negotiations for the loan or the advance of the money had been at arm's length, | ||
(ii) at the time the loan was made or the money was advanced the terms were such that subparagraph (i) did not apply, the said terms are subsequently altered and the terms as so altered are such that if they had applied at the time the loan was made or the money was advanced, subparagraph (i) would have applied, | ||
(iii) any interest payable on the loan or on the money advanced is waived, | ||
(iv) any interest payable on the loan or on the money advanced is not paid within 12 months from the date on which it became payable, or | ||
(v) the loan or the money advanced or any part of the said loan or money advanced is not repaid within 12 months of the date on which it becomes repayable; | ||
(d) the cases in which a person is to be regarded as making a loan to any other person include a case where— | ||
(i) that other person incurs a debt to that person, or | ||
(ii) a debt due from that other person to a third party is assigned to that person: | ||
Provided that subparagraph (i) shall not apply to a debt incurred for the supply by that person of goods or services in the ordinary course of his trade or business unless the credit given exceeds six months or is longer than that normally given by that person; | ||
(e) a company, other than a private company, shall be deemed to be a company referred to in section 34 (1) (a) (i) of the Finance Act, 1974 , if it is a holding company and it is resident in the State, and | ||
(f) an individual shall be deemed to be a full-time employee or full-time director of such a company as is referred to in paragraph (e) if he is a full-time employee or full-time director of any company which is a 90 per cent. subsidiary of that company. |